In a 3-2 opinion, New York’s First Department has just ruled, in a case of first impression, that a general liability policy’s employee exclusion bars coverage for a bodily injury claim to a worker hired by the insured’s subcontractor.

In Nautilus v. Matthew David, et al., the insured managed a corporate party on Randall’s Island in New York. The insured hired a subcontractor to provide services for the party and the subcontractor then hired the worker who was later injured while falling from a vehicle on the event grounds.

The insurance policy at issue excluded coverage for injury to “employees” — defined as any person “hired by, loaned to, leased to, contracted for, or volunteering services to the insured, whether or not paid by the insured.” The court ruled that even though the injured worker had not been directly hired by the named insured, the worker had been “contracted for” by the insured because the subcontractor that hired the worker had been retained by the insured to provide services for the event.

See Nautilus v. Matthew David, et al. http://www.courts.state.ny.us/reporter/3dseries/2010/2010_00296.htm